The PRA has provided an update to Supervisory Statement 17/13: Credit risk mitigation (SS17/13). The update concerns the netting of liabilities that may be subject to bail-in.

SS17/13 has been updated to clarify that the PRA does not expect that a netting agreement is an eligible form of credit risk mitigation under Part 3, Title II, Chapter 4 of the Capital Requirements Regulation, where a resolution authority has the power to bail-in the liabilities in question on a gross basis. Conversely, the PRA does not expect that the legal effectiveness and enforceability of a netting agreement is adversely affected by a resolution authority having a power to bail-in the liabilities in question only on a net basis.

View SS17/13 Credit risk mitigation – update 12 December 2014 regarding the netting of liabilities that may be subject to bail-in, 12 December 2014